Management Accounting II

Students must have knowledge of Management and Administration, namely with regard to the Management Cycle and the various functional areas of organizations.

Students must also have knowledge of Financial Accounting, namely with regard to Financial Statements, accounting records in a double-entry system and the Accounting Standardization System, in general.

Students must also have knowledge of the contents taught in the subject Management Accounting I.

The teaching methods to be used are as follows:

Theoretical component: Expository method, in which the teacher presents concepts, principles, deductions or statements from which conclusions or consequences are drawn. The participation of students will be encouraged during the presentation of the themes and that the students are the ones to draw conclusions, namely through:

• Content exposure;
• Questions to students during the exhibition;
• Debates/discussions, in class.

Practical component: Programmed teaching, based on the active participation of the student, on division of tasks into parts that are easy to solve, on learning with an increasing degree and complexity, on immediate feedback and, whenever possible, on adaptation to the learning rhythm of each student, namely through:

• Individual assignments/Exercise resolution
• Resolution of case studies
• Small group work
• problem-based learning
• Use of digital interaction platforms (Moodle, Mentimeter, Kahoot).

Objectives:

Transmission/acquisition of the knowledge necessary to calculate the production cost and results of products manufactured and/or services provided by an entity:

1) through the method of homogeneous sections;

2) through the method of activities;

3) when there is joint and defective production;

4) according to the total, variable and rational costing systems;

5) using these costs in the valuation of inventories and in the result cost volume analysis;

6) sustaining short-term decision-making;

7) in a global process based on the design of the Management Accounting system.

Skills to develop:

• Distribution of indirect costs using Cost Centers, distinguishing, among others, main and auxiliary centers (objective 1);
• Use of the Activity Based Costing (ABC) system as an alternative to traditional costing systems, from the perspective of sharing and attributing indirect costs (objective 2);
• Distribution of joint costs and valuation of production in the presence of defective production (objective 3);
• Valuation of inventories according to various costing systems and in the presence of joint and defective production (objective 4);
• Understanding and using the existing relationships between Cost, Volume and Result (objective 5);
• Use of Management Accounting in the decision-making process (objective 6);
• Implementation of Management Accounting systems adapted to different organizations (objective 7).

In order to achieve the objectives of the curricular unit and to provide students with the desired skills, the syllabus is as follows:

I – COST BASED ON COST CENTERS (Objective 1)

 1. Functional Division of Costs

 2. Cost Centers. Main and Auxiliary Centers

 3. Cost Sharing by Centers. Refunds.

 4. Analysis of Some Natures of Costs

 5. Cost Calculation Maps

 II – ACTIVITY-BASED COST (Objective 2)

 1. Treatment of Costs in Activity Costing

 2. Design of an Activity Based Costing System (ABC)

 3. The Mechanics of Costing by Activities

 4. Activity Based Management (ABM)

 5. Assignment of Costs to Cost Objects

 6. Comparison of Traditional Costing Systems and ABC

 7. Analysis of Product Cost Behavior

 8. Costing by Activities and External Reports

 9. Simplified Approach to the Activity-Based Costing System

 III – JOINT PRODUCTION (Objective 3)

  1. Problems of joint production;

 2. Types of joint products;

 3. Reasons for apportioning joint costs;

 4. Methods of apportioning joint costs:

 4.1 Evaluation of co-products;

 4.2 Evaluation of by-products;

 4.3 Evaluation of waste and residues;

 4.4 Comparison of methods;

 5. Joint costs and decision making;

 6. Defective production.

 IV – INVENTORY COSTING SYSTEMS (Objective 4)

 1. Alternative Costing Systems

 2. Total cost

 3. Variable Costing

 4. Rational Costing

 5. Costing alternatives and effects on results

 V – COST-VOLUME-RESULT RELATIONS (Objective 5)

  1. Cost Behavior

 2. The contribution model

 3. Fundamentals of Cost-Volume-Result Analysis (CVR)

 4. CVR Analysis in Variable Costing

 5. The sales mix concept

 6. CVR Analysis Assumptions

 VI – MANAGEMENT ACCOUNTING AND DECISION MAKING (Objective 6)

  1. Information and decision-making

 2. Relevant costs/profits and decision making

 3. Importance of qualitative factors in decision making

 4. Examples of short and medium- and long-term decisions

 VII – DESIGN OF MANAGEMENT ACCOUNTING SYSTEMS (Objective 7)

 Main steps for defining and implementing management accounting systems.

NAO

Fundamental bibliography:

•  Horngren, Charles T.; Dating, Srikant M.; Rajan and Madhav V. (2015), Cost Accounting, Pearson, 15th Edition.
• Drury, Colin (2019), Management Accounting for Business, Cengage Learning, 7th Edition.

Complementary bibliography:

• Drury, Colin (2017), Management and Cost Accounting, Cengage Learning, 10th Edition.
• Garrison, Ray H. and Noreen, Eric W. (2013), Management Accounting, McGraw Hill, 14th Edition.
• Hansen & Mowen (2007), Management Accounting, South-Western College Publishing, 8th Edition.